Kohl's taps McCann to handle $100 mil broadcast account

Kohl's Department Stores, flying high after proving its retail formula can make it in New York, unexpectedly switched advertising agencies last week.

Kohl's named McCann-Erickson Worldwide, New York, to handle its $90 million to $100 million broadcast creative and media account. The retailer's growth rate was a factor in the decision to part with J. Walter Thompson USA, Detroit, after four years.

"We are at a very important point in our growth and we have to continue that," said Julie Gardner, senior VP-marketing. "We had to make sure we had the best marketing partner for the future."

CONSOLATION PRIZE

JWT's consolation prize, however, could be rival Kmart Corp.'s $100 million advertising account. JWT's Detroit office is said to be pitching the business and possibly on the short list the retailer will release this week. Also believed on the list are incumbent Campbell Mithun, Minneapolis and FCB Worldwide, Chicago. The fourth couldn't be learned at press time.

Menomonee Falls, Wis.-based Kohl's, a retailer of name brand products at discount prices, has been growing rapidly and is planning to open 60 stores this year and an equal number in 2001. It already has converted 32 former Caldor stores in the New York metropolitan area to Kohl's, and Ms. Gardner said it will grow from a regional to national advertiser in the next few years.

ANALYSTS ARE EFFUSIVE

In March, Kohl's announced its fourth consecutive year of earnings growth, up 30% on sales of $4.6 billion from the year earlier. Analysts are effusive in their views of the company and regard it as having unbridled expansion opportunities. Its stock price closed July 28 at $64.06, close to its 52-week high of $66.50.

For JWT, the shift "came to us as a very large surprise. It's devastating news to us," said Steve Brown, exec VP-general manager of JWT, Detroit. "Never in my 25 years in this business have I lost a relationship because of nothing but positive [client] news. The data showed all the advertising worked in all markets," he said. He said the 35 Thompson staffers working on Kohl's will be moved to other accounts, including Ford Motor Co. and Domino's Pizza.

MCCANN'S `PROJECT K'

About four months ago, rumors surfaced that Kohl's was talking with agencies. McCann assembled a team of its top talents to work on a pitch internally code-named "Project K."

Next week, the estimated 1,000 McCann, New York, staffers will each receive $25 gift certificates to Kohl's when they get their paychecks.

"This is the way to celebrate with the client," said Eric Keshin, general manager and chief operating officer, McCann, New York. "It's a great way to say we're on board."

In 1999, Kohl's backed its "That's more like it" campaign from JWT with $93 million, according to Competitive Media Reporting. Ms. Gardner declined to discuss the retailer's current ad budget.

The department store produces its own print and does print media buying in-house. Kohl's also is continuing with its review for creative for an e-commerce site it plans to launch next year.